4.5 [CSS-Level1-2008] Section 5.4.7, text-indent
The [CSS-Level1-2008] specification states:
Section 16.1: text-indent Value: <length> | <percentage> Initial: 0 Applies to: block-level elements Inherited: yes Percentage values: refer to parent element's width
Quirks Mode and IE7 Mode (All Versions)
The percentage is evaluated with regards to the width of the containing block rather than the width of the parent element (which may not be a block-level element).